And we’re about to get the next chapter in that lesson: the incoming US consumer price index (CPI) is set to be the central focus for markets over the coming week.
Here are the scheduled economic data releases and potentially market-moving events for the week ahead:
Monday, November 7
- CNH: China October external trade
- EUR: ECB President Christine Lagarde speech, Germany September industrial production
- USD: Fed Speak – speeches by Boston Fed President Susan Collins, Cleveland Fed President Loretta Mester, Richmond Fed President Tom Barkin
Tuesday, November 8
- AUD: Australia October household spending, November consumer confidence
- EUR: Eurozone September retail sales
- GBP: Speeches by BOE MPC member Catherine Mann, BOE Chief Economist Huw Pill
- USD: US midterm elections
- Disney 4Q earnings
- Twitter shares to delist
Wednesday, November 9
- CNH: China October CPI and PPI
- GBP: Speech by BOE MPC member Jonathan Haskel
- USD: Fed Speak – speeches by New York Fed President John Williams, Richmond Fed President Tom Barkin
- US crude: EIA weekly oil inventory report
Thursday, November 10
- AUD: Australia November consumer inflation expectations
- Gold: US October inflation
- USD: US weekly initial jobless claims, speeches by Dallas Fed President Lorie Logan, Kansas City Fed President Esther George, Cleveland Fed President Loretta Mester
Friday, November 11
- EUR: Germany October CPI (final)
- GBP: UK 3Q GDP, September industrial and manufacturing production, external trade
- USD: US November consumer sentiment
Here are the forecasts by economists for Thursday’s (NOvember 10th) crucial inflation data release:
- Headline CPI is set to moderate from September’s 8.2% year-on-year growth down to 8% for October. That’s still four times higher than the Fed’s 2% target.
- Core CPI (excluding food and energy prices) is expected to remain stubbornly elevated at a 40-year high of 6.6%.
Until the inflation data points to a sustained slowdown, the Fed would be unrelenting in sending US interest rates upwards.
And as we know, this ongoing policy-tightening has already been this year’s enemy #1 for risk assets.
In addition to the hard data, the scheduled speeches by Fed officials in the days ahead may offer further nuance to the US rates outlook, even as Fed Chair Powell’s hawkish signals are still ringing in our ears.
If the other Fed officials suggest that at least some of them are considering when to hit pause on the rate hikes, that may spell some measure of relief for the likes of gold.
Note how since September, spot gold has been able to rebound every time its reaches down into the $1614-$1617 region.
Still, the precious metal remains firmly in its longer-term downtrend, having been guided lower by various simple moving averages (SMA).
Another major dose of unrelenting US inflation, especially in the case of higher-than-expected CPI figures in the week ahead, may result in this key support region giving way below spot gold.
On the other hand, spot gold could resurface above its 21-day SMA if the inflation data eases meaningfully, or if next week’s Fed speak do not echo Chair Powell’s hawkish rhetoric.
Of course, the projected price action above assumes that such levels haven’t been reached before the weekend, depending on how bullion reacts to the pivotal US jobs data due to be released later today (Friday, Nov. 4th).
Read More: Week Ahead: Will gold hit new 2-year low?